A recent Law 360 story by Rachel Riley, “9th Circ. Oks Fee Cut In Progressive Deal Over Totaled Cars”, reports that a Ninth Circuit panel ruled that a lower court had the discretion to decide a $5 million fee request was unreasonable in a class action in which Progressive Direct Insurance Co. was accused of shortchanging Washington state policyholders for totaled vehicles, upholding the revised $1.1 million award. Rejecting the lead plaintiff's argument that the fees should have been calculated as a percentage of the entire $19.2 million settlement fund, the three-judge panel said the lower court didn't overstep its authority by basing the fees on the amount expected to go to the class after just one-fifth of members filed claims.
In a four-page unpublished memorandum, the panel pointed to the trial judge's "broad discretion to determine the reasonableness of attorney fees" under Washington law. Ameenjohn Stanikzy sued Progressive in January 2020, claiming the company had paid him and other automobile policyholders less for total vehicle losses than their policies entitled them to under Washington law.
Represented by Stephen M. Hansen of the Law Offices of Stephen M. Hansen PS and Scott P. Nealey of the Law Office of Scott P. Nealey, Stanikzy contended the class and Progressive had negotiated the nearly $20 million fund size as the maximum amount that could be claimed under the deal and agreed up to 26%, or about $5 million, would be paid in attorney fees.
U.S. District Judge Barbara Rothstein denied that request in June last year, explaining only about 5,600 of 28,500 identified class members filed a claim before the deadline. She reasoned the settlement should be 26% of $4.26 million, her estimation of the "actual benefit conferred on the class" based on the number of claims filed. The $19.2 million total is a theoretical maximum, Judge Rothstein added, because the agreement clearly states that any portion not claimed by class members or spent on class costs will remain in Progressives' possession.
Progressive took no position on the appeal, according to a brief it filed in the Ninth Circuit, and said the attorney fee challenge does not affect the terms of the deal. The appellate panel said Judge Rothstein had adequately explained how she weighed competing factors in her calculation.
The panel noted the judge "observed that the requested fee would dwarf the class recovery; that a comparison to the lodestar amount of $390,000 showed that class counsel's requested award of $5 million was unreasonable; and that class counsel achieved 'good' but not 'exceptional' results for the class in litigation that was active for scarcely over a year and never even reached the class certification stage."
According to Judge Rothstein's ruling, Hansen reported spending nearly 140 hours on the litigation at a $300 hourly rate for himself and a $100 hourly rate for a paralegal. Nealey's time records showed he spent about 330 hours on the case at hourly rates of up to $1,000, Judge Rothstein noted.